Sole Proprietorship

Sole Proprietorship•Liability is unlimited. The owner or sole proprietor is legally responsible for all debts, law suit settlements and contract fulfillments. Though insurance policies can be purchased to protect against unforeseen events, a judgment decree or balance exceeding the purchased plan amount could come directly out of the personal assets of the owner including but not limited to personal home, bank accounts, college funds or other tangible assets. •Income Taxes for sole proprietorship act no differently than paying standard income tax. The IRS sees no distinction between the sole proprietor and the owner’s personal finances. A standard 1040 form will be prepared yearly including a schedule C or C-EZ form for profit disclosure. Tax rate will vary year to year depending on the net profits of the business. •Longevity is limited to the lifetime of the owner or the completed sale of the company’s tangible and intangible assets to an individual or outside entity •. If the owner dies without selling, the business ceases to exist. •Control is the most appealing factor for Sole Proprietorships as the owner needs only answer to themselves. The owner makes all decisions for the day to day operations of the company including entering into contracts, handling finances, hiring employees and even at will dissolution of the company. •Profit retention is a key factor that distinguishes Sole Proprietorship over all other business forms. The owner retains all profits for their own. They have no legal obligation to share the profits with any one. Please note that this does not grant the owner clemency from paying their debts or obligations if profits are low for any given length of time. •Location can be anywhere but is registered on a state level and must abide by local state laws. If distributing goods to other states than the registered state of the business other tax implications come in to play such as whether sales tax must be applied....

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...A 'soleproprietorship, also known as the sole trader or simply a proprietorship, is a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business. The owner receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts. Every asset of the business is owned by the proprietor and all debts of the business are the proprietor's. It is a "sole" proprietorship in contrast with partnerships. Glos and Baker write that "A soleproprietorship is a business owned by one person who is entitled to all of its profits," and Reed and Conover say "The single or the soleproprietorship is a business owned and controlled by one man even though he may have many other persons working for him." A sole proprietor may use a trade name or business name other than his or her legal name. In many jurisdictions there are rules to enable the true owner of a business name to be ascertained. In the United States there is generally a requirement to file a doing business as statement with the local authorities.[1] In the United Kingdom the proprietor's name must be displayed on business stationery, in business emails and at business premises, and there are other requirements.[2]
Advantages
They have the...

...The sole proprietor is an unincorporated business with one owner who pays personal income tax on profits from the business. With little government regulation, they are the simplest business to set up or take apart, making them popular among individual self-contractors or business owners.
Many sole proprietors do business under their own names because creating a separate business or trade name isn't necessary.
Soleproprietorship is also known as "proprietorship".
There is no separate legal entity created by a soleproprietorship, unlike corporations and limited partnerships. Consequently, the sole proprietor is not safe from liabilities incurred by the entity. The debts of the soleproprietorship are also the debts of the owner. However, all profits flow directly to the owner of a soleproprietorship.
The benefit of the soleproprietorship is the tax advantage. The disadvantage of a soleproprietorship is obtaining capital funding, specifically through established channels, such as equity (selling shares) and obtaining bank loans or lines of credit. As a business grows it often transitions to a limited liability company (LLC) or S Corporation.
Ease of Formation
Prospective business owners need not file any special forms with state, local or...

...Disadvantages of SoleProprietorship
Profits and Losses – Advantages: Proprietor receives all the profits because he or she takes all the risks.
Disadvantages: Losses are not shared.
Liability - Disadvantages: 1) The proprietor has unlimited liability. 2) If the firm is unable to pay its bills, the proprietor can be force to sell personal assets as well as the business to pay debts.
Management – Advantages: 1) Decisions on starting and running the business can be made quickly. 2) Business operations are less complicated than other types of businesses. 3) There are generally fewer government regulations.
Disadvantages: A proprietor must handle all decision making, even for unfamiliar areas of the business. This is a severe problem for many soleproprietorships.
Taxes - Advantages: Taxes are usually low because a proprietor pays only personal income taxes on profits.
Personal Satisfaction – Advantages: 1) The proprietor has high satisfaction in being his or her own boss. 2) The owner can make the business into whatever he or she wants it to be.
Disadvantages: 1) Running a soleproprietorship is demanding and time-consuming. 2) If the proprietor does not enjoy responsibility, he or she will find ownership a burden.
Financing Growth– Advantages: Proprietors can obtain credit relatively easily. Lenders know they can take over the assets of the business as well...

...SoleProprietorship in the U.S.
A sole proprietor is an individual who owns an unincorporated business. There are nearly 23 million soleproprietorships, not counting single-owner farm businesses, in the United States, and many of these engage employees in addition to their sole proprietor owners. Soleproprietorships are subject to state laws regarding registration and licensing, which are similar but vary from state to state.
Formation
Every state has its own code of business laws authorizing the formation and management of business entities. All states allow individuals to conduct business activities as a sole proprietor without forming an independent legal entity. The simplicity of forming a soleproprietorship is one of its chief attractions to many entrepreneurs. Some states require a soleproprietorship to obtain a statewide business license. In other states, business licensing is conducted by municipal agencies. Local licensing requirements may vary depending on the nature of the soleproprietorship business and its location.
Name Registration
Soleproprietorships in all states may operate under an assumed or fictitious business name, referred to as a "doing business as," or DBA, name. In some states, this name must be...

...﻿SoleProprietorship
It refers to a form of business organisation that is owned and controlled by one individual.
He is the only risk bearer and the profit recipient
The word ‘sole’ implies only and the word ‘proprietor’ refers to owner. Hence a sole proprietor is the only owner of the business.
FEATURES
1. Formation and Closure –
Hardly any legal formalities are required to start.
But in some cases licence might be required.
Closure can be done easily.
Hence it is easy to form and close the business
2. Liability-
They have unlimited liability.
The owner is responsible to pay the debts. But, in case the assets of the business are not sufficient to meet the requirement, he has to sell his personal assets to repay all his debts.
3. Sole Risk Bearer & Profit Recipient-
The risks of the business are all borne by the owner
The profit is enjoyed fully by him when the business is successful
Hence he receives all the profit as a reward for bearing all the risks to earn the profit.
4. Control-
The owner runs all the business activity and hence makes all the decisions.
5. No Separate Entity-
Under soleproprietorship, the owner is not considered to be separate and distinct from the business. (By law)
Hence, owner is held responsible for all the activities of the business.
6. Lack of Business Continuity-
Since owner and business...

...1. The vast majority of business in the United States are owned and organized under one of four forms. A soleproprietorship is a business that is owned and managed by one individual. A soleproprietorship is simply an extension of the owner. Any earnings of the company is treated as the income of the owner. A partnership is a voluntary agreement under which two or more people act as co-owners of a business for profit. In its more basic form known as general partnership, each partner has the right to participate in the company’s management and share profits, but has liability for any debts the company might have. A corporation is a business entity created by filing a form known as articles of incorporation with the appropriate state agency, paying the states incorporation fees, and meeting other requirements. A corporation is considered to be a legal entity that is separate and distinct from its owners. A limited liability is a hybrid form of business ownership that is similar in some respects to a corporation while having other characteristics that are similar to a partnership. This is a legal entity separate from its owners. The owners can elect to have their business taxed either as a corporation or a partnership.
2. Soleproprietorships have some advantages. The ease of formation, the paperwork and costs involved in forming a soleproprietorship are...

...CHAPTER FOUR SOLEPROPRIETORSHIP
I.
INTRODUCTION
The soleproprietorship is the simplest form of “business association” we will examine. It is perhaps a bit odd to describe it as a form of “association” given that the “sole” proprietor will be the only “equity” investor and thus doesn’t “associate” with anyone else as a co-equity investor. However, there will almost invariably be “associations” that the sole proprietor will have in order to carry on the business. These can include associations with employees, agents, lenders (such as a bank) and trade creditors. This chapter looks at the structure of the soleproprietorship, its formation, legal status, name registration requirements, funding, management, and dissolution. It also briefly notes why one might want to use this form of business association to carry on a business.
II.
STRUCTURE
Objectives: Closed Book Be able to: (i) Briefly describe the legal structure of the soleproprietorship. (ii) Explain the potential for the management structure to become quite complex.
The legal structure of the soleproprietorship is very simple. The sole proprietor owns the assets of the business and is the ultimate decision-maker. However, a soleproprietorship management structure can, in practice, be very...

...BUSINESS PROSPECTS OF “THE THUNKER” 1
BUSINESS PROSPECTS OF “THE THUNKER”
Elizabeth Alfred
Bus105
October 2010
BUSINESS PROSPECTS OF “THE THUNKER” 2
Business owners can form soleproprietorships, partnerships, or corporations. Each type of business entity has its pros and cons that can have a significant impact on the business and its owners. When considering a new product for a saturated market such as the clicker or the three-pronged power cord, there are several pros and cons to consider with each possible choice.
Although the author personally has no inventive talents whatsoever, for the purposes of this paper the potential invention will be called “The Thunker”. As the family is not exceptionally well off in this scenario, starting costs will be an issue of great importance. There are closely similar items to “The Thunker” saturating the current market, but they pose incredible safety hazards that “The Thunker” does not. Therefore, there is exponential growth potential, and expansion costs will need to be considered rapidly to meet expected demand. As the prospective owner with no financial skills other than common household budgeting and little management experience consisting of only of raising children, there are a lot of concerns of the potential legalities, paperwork,...